Every month, the IRS announces an interest rate index called the AFR Rates. These interest rates are based on the average market yields on outstanding marketable obligations of the US Treasury and are used for various purposes under the Internal Revenue Code — including the calculation of imputed interest on below market loans between family members.

If you’re considering a family loan — especially a loan above $10,000 — the AFR Rates represent the minimum interest rate a lender should charge a borrower in order to prevent potential tax problems.